Furthermore, did anything ever become of the proposal?
The story is an apocryphal one, and it was supposedly over whether Lincoln should issue the Emancipation Proclamation.
While the story is apocryphal, it does illustrate a truth about Lincoln's relations with his cabinet. The Emancipation Proclamation was opposed by many of Lincoln's own cabinet secretaries, who thought that it would unnecessarily block peaceful reconciliation with the Confederacy and maybe even invite foreign intervention.